Ousted Tax-Agency Head to Testify at Hearings

President Obama on what the White House knew about the Inspector General's report regarding IRS targeting of Tea Party groups and what actions he plans to take.

By

John D. McKinnon and

Siobhan Hughes

Updated May 16, 2013 9:22 p.m. ET

Lawmakers prepared to grill the ousted head of the Internal Revenue Service as well as an IRS watchdog Friday as they seek to understand officials' motivations for the targeting of conservative groups and the failure to disclose those actions.

The hearing before the House Ways and Means Committee is likely to expand into other issues, including the disclosure of confidential IRS application forms and private tax information last year. Some lawmakers also are interested in finding out whether agency officials were influenced by political motivations, despite prior IRS denials.

Seeking to restore order at the troubled agency and gain a measure of control over the sprawling controversy, President Barack Obama on Thursday named a new acting IRS commissioner, a day after sacking the current one, Steven Miller.

Mr. Obama chose Daniel Werfel, the controller of the Office of Management and Budget, equivalent to the government's chief financial officer. His appointment is effective Wednesday, and Mr. Werfel has agreed to serve through the end of fiscal year on Sept. 30.

President Obama named the current controller of the White House budget office, Daniel Werfel, as acting commissioner of the IRS. He replaces Steven Miller, who resigned in the midst of controversy over IRS targeting of conservative groups. Damian Paletta reports. Photo: AP.

Multiple investigations into the IRS—by congressional committees, the Treasury inspector general for tax administration and the Justice Department—are likely to keep the focus on what went wrong. In the latest twist that is generating interest among lawmakers, Joseph Grant, the commissioner of tax exempt and government entities, announced Thursday that he plans to retire June 3. Mr. Grant helped oversee the unit where the targeting problems occurred. He wasn't immediately available for comment. He took over his current post from another official who now runs the IRS Affordable Care Act office.

An overarching question in the hearings will be whether the misdeeds were influenced by political winds, particularly from Washington, or resulted from bureaucratic snafus.

Many Republicans believe the problems ultimately trace to senior officials, despite IRS denials. "I just simply refuse to believe that lower-level IRS personnel were making these kinds of decisions," said Rep. Charles Boustany Jr. (R., La.), who chairs the Ways and Means subcommittee that oversees the IRS.

GOP lawmakers are particularly interested in the role of Lois Lerner, the director of the exempt organizations unit, who knew of the problems at least as early as 2011 but failed to disclose the problems to Congress in letters during 2012.

More

Democrats, while acknowledging the problems, said the hearings shouldn't become a partisan sideshow. "We started on a bipartisan basis; I hope it continues," said Rep. Sander Levin (D., Mich.), the panel's top Democrat. "Politicizing this is a serious mistake."

On Thursday, Republicans on the Senate Finance Committee asked for an investigation into recent unauthorized disclosures of confidential tax information by the IRS, including from Karl Rove's Crossroads GPS, which spent heavily in the 2012 elections. Its confidential application for tax-exempt status was among a number the IRS sent to ProPublica, a news organization investigating whether such groups were entitled to that status.

Related Video

"There's going to be a complete and thorough investigation of this in Congress—not only who above may have known about it but what the rank-and-file believed was their mission," Senate Minority Leader Mitch McConnell (R., Ky.) said at a news conference with tea-party groups.

ProPublica said in a news article earlier this week it obtained the applications from the Cincinnati office of the IRS, the same office at the center of the broader controversy, which singled out for extra scrutiny applications for 501(c)(4) tax-exempt status from groups with names like "tea party" and "patriot."

Republicans also are questioning whether the IRS improperly released donor information of the National Organization for Marriage, a nonprofit tax-exempt 501(c)(4) organization.

The IRS said it "takes its role to protect confidential tax information very seriously," and that the "unauthorized disclosures" were reviewed by the inspector general, who found them to be "inadvertent and unintentional."

A Crossroads GPS spokesman has said the group has been told the IRS is investigating. Its application is still pending.

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.